The following transactions occurred in a merchandising business that was incorporated in the month of October. The numbers beside the transactions represent the day of the month the transaction occurred. The company is using a sales price per unit of $10 .There are no discounts (for sales or purchases) in this problem, and ignore sales returns and allowances for this problem. A chart of accounts is provided at the end of the assignment. All transactions must be recorded with the appropriate account number and monetary value, account titles are optional, but journal format should be consistent throughout the assignment. Debits should still be listed FIRST in all entries, then credits.

1. JOURNAL ENTRIES: Prepare an appropriate journal entry for each of the following transactions.

1 The organization issued 2,000 shares of $10 par value common stock, they received $40,000 in cash.

1 Purchased 300 units of inventory on account, $3.50 per unit.

1 Paid cash to ship the inventory, $300 total.

2 Purchased a building with land for the business with a fully amortized mortgage note (periodic principal and interest with constant payment amount) note, 20 year, 6%. In addition to the purchase price of $150,000. The land and building were independently appraised at $50,000 and $150,000, respectively. Attorney’s fees and other costs associated with the joint purchase totaled $10,000 and were paid with cash.

2 Paid cash for the previous purchase of inventory (300 units on 10/1).

2 Office supplies were purchased from Office Supply Store on account - $550

3 Purchased 150 units of inventory on account, $3.50 per unit.

3 Paid cash to ship the inventory, $150 total.

3 Sold 320 products to customers on account, sales price of $10 per unit. (Determine the cost of products based on inventory purchases and any related transactions).

3 Paid shipping costs on the above sale with cash, $160

4 Office furniture was purchased with a 2 year promissory note (periodic interest payment, lump sum principal), 12% annual interest, and payable semi-annually - $5,750.

5 Sold 100 products to customers for cash.

5 Paid shipping costs on the above sale with cash, $50

5 Purchased 250 units of inventory on account - $3.50.

5 Paid cash to ship the inventory, $250.

6 Paid off all inventory account purchases with cash (150 units on 10/3 & 250 units on 10/5).

7 Received cash for previous sale on account (320 units on 10/3).

7 Sold 120 products to customers on account.

9 Sold 100 products to a customer for cash.

9 Paid shipping costs on the above sales with cash, $110

15 Received cash for previous sale on account (120 units on 10/7).

15 Paid employees with cash, Gross - $2,100. Federal and State withholdings, 15% and 5%, respectively. FICA 7.65%. Employer payroll taxes include FUTA - .6%, SUTA – 5.4%, FICA match – 7.65%.

16 Purchased 350 units of inventory on account, $3.50. Paid cash to ship the inventory, $350.

20 Sold 220 products to a customer on account.

20 Paid shipping costs on the above sale with cash, $110

26 Paid Office Supply Store (10/2) - $550

28 Sold 100 products to a customer for cash.

29 Sold 50 products to a customer on account.

29 Paid shipping costs on the above sales with cash, $75

30 Paid employees with cash, Gross - $2,100. Federal and State withholdings, 15% and 5%, respectively. FICA 7.65%. Employer payroll taxes include FUTA - .6%, SUTA – 5.4%, FICA match – 7.65%.

Chart Of Accounts

100	Cash	270	Notes Payable - Long-Term
105	Accounts Receivable	275	Mortgage Payable
106	Allowance for Bad Debts - Accounts	280	Bonds Payable
110	Notes Receivable	281	Premium on Bonds Payable
115	Other Receivables	282	Discount on Bonds Payable
120	Inventory	300	Common Stock
121	Estimated Inventory Returns	301	Additional Paid in Capital - Common
125	Supplies	305	Preferred Stock
130	Prepaid Insurance	306	Additional Paid in Capital - Preferred
131	Prepaid Rent	310	Treasury Stock
132	Prepaid Asset - Other	311	Additional Paid in Capital - Treasury
135	Other Current Assets	350	Retained Earnings
150	Land	355	Cash Dividends
155	Buildings	356	Stock Dividends
156	Accumulated Depreciation - Building	400	Service Revenue
160	Machinery & Equipment	401	Service Allowance
161	Accumulated Depreciation - M & E	402	Service Discount
165	Furniture & Fixtures	405	Sales Revenue
166	Accumulated Depreciation - F & F	406	Sales Return or Allowance
170	Land Improvements	407	Sales Discount
171	Accumulated Depreciation - Land Imp.	410	Interest Revenue
200	Accounts Payable	425	Other Revenue
205	Salaries Payable	500	Cost of Goods Sold
210	Other Accrued Expenses	505	Rent Expense
215	Employee Income Tax Withholding	510	Utilities Expense
216	FICA Payable	515	Salaries Expense
217	FUTA Payable	520	Payroll Tax Expense
218	SUTA Payable	525	Supplies Expense
220	Sales Tax Payable	530	Insurance Expense
225	Dividends Payable	535	Depreciation Expense
230	Income Tax Payable	540	Bad Debts Expense
235	Interest Payable	545	Warranty Expense
240	Refunds Payable	550	Interest Expense
245	Warranty Payable	555	Income Tax Expense
250	Notes Payable - Current	560	Miscellaneous Expense
255	Current Portion of Long-Term Debt	600	Gain on Asset Disposal
260	Other Payables	601	Loss on Asset Disposal

Answer rating: 100% (QA)

Date Account Debit Credit Oct 1 Cash 40000 Commn Stock 200010 20000 Additional Paid in Capital Commo... View the full answer